Iran
warned on Saturday the West has until the end of the month to accept
Tehran's counterproposal to a U.N.-drafted plan on a nuclear exchange,
or the country will start producing nuclear fuel on its own.

The
warning was a show of defiance and a hardening in Iran's stance over
its controversial nuclear program, which the West fears masks an effort
to make nuclear weapons.
Tehran insists the program is only for peaceful, electricity production
purposes and says it has no intention of making a bomb.

"We have given them an ultimatum. There is one month left and that is by the end of January," Foreign Minister Manouchehr Mottaki said, speaking on state television.

However,
even if Tehran started working on the fuel production immediately, it
would likely take years before it can master the technology to turn
uranium, enriched to the level of 20 percent, into rods that make the
fuel.

Iran dismissed an end-of-2009 deadline
imposed by the Obama administration and the West to accept a
U.N.-drafted deal to swap most of its enriched uranium for nuclear
fuel. The deal would have reduced Iran's stockpile of low enriched
uranium, limiting — at least for the moment — its capabilities to make
nuclear weapons.

The U.S. and its allies have demanded Iran accept the terms of the U.N.-brokered plan without changes.

Instead,
Tehran came up with a counterproposal: to have the West either sell
nuclear fuel to Iran, or swap its nuclear fuel for Iran's enriched
uranium in smaller batches instead of at once as the U.N. plan calls
for.

This is unacceptable to the West because it would leave Tehran with enough enriched material to make nuclear arms.

The U.N. deal has been the centerpiece of the West's diplomatic effort toward Iran.

Under
the plan, drafted in November, Iran would export most of its stockpile
of low-enriched uranium for further enrichment in Russia and France,
where it would be converted into fuel rods. The rods, which Iran needs
for a research reactor in Tehran, would be returned to the country about a year later.

Exporting
the uranium would temporarily leave Iran without enough stockpiles to
further enrich the uranium into the material for a nuclear warhead, and the rods that are returned could not be used to make weapons.

"They
(the West) must decide on supplying fuel for the Tehran reactor on one
of the two offers, purchase or swap," Mottaki said. "Otherwise, the
Islamic Republic of Iran will produce the 20 percent enriched fuel with
its own capable experts."

Enrichment is at the
core of the nuclear controversy. Iran currently has one operating
enrichment facility that churns out 3.5 percent enriched uranium. The
country needs fuel enriched to 20 percent to power a Tehran medical research reactor. For nuclear weapons, uranium needs to be enriched to 90 percent or more.

The
U.N. has demanded Iran suspend all enrichment, a demand Tehran refuses,
saying it has a right to develop the technology under the
Non-Proliferation Treaty.

Iran has also defiantly announced it intends to build 10 new uranium enrichment sites, drawing a forceful rebuke from the U.N. nuclear watchdog agency and warnings of the possibility of new U.N. sanctions.